HEALTH CARE: KPS seeks financial relief

A rare special meeting of KPS Health Plan doctors next week is fueling speculation about the financial health and future of West Sound's largest insurance provider.

A company official confirmed late Friday that KPS physician members may be asked at the meeting to make financial concessions for the good of the company.

But the official, Dr. Mark Adams, chairman of the board of directors, denied that the concessions are being sought to avoid bankruptcy, as alleged by at least one physician, Dr. Alfred Aflatooni.

Instead, Adams said, the concessions might be needed to rebuild KPS's financial reserves more quickly after three years of heavy losses.

He declined to estimate the size of the possible concessions, saying that information would not be available until next week.

Adams said that the company has had to ask for such concessions before, and that such a move is not unprecedented. The last time it happened was in 1980, he said.

"There is a possibility that they (doctors) may be asked to make financial concessions again," he said. "When it happened before, they didn't like it too much, not surprisingly."

"We need to feel the doctors out and talk to them because they do have a stake in the future of (the company)," he said.

Tuesday's special meeting also will address a number of rumors swirling about the financial health and viability of KPS, Adams said, as well as issues related to a lawsuit filed against the company by Aflatooni.

Adams announced the "very important special membership meeting" in a July 15 letter to member physicians.

KPS, with nearly 600 physician members, serves more than 78,000 people in Kitsap, Mason, Jefferson, Clallam and Thurston counties. The company changed its name from Kitsap Physicians Service six weeks ago to reflect that it now serves five counties.

KPS Health Plans President Rob Schneidler said the company is continuing its financial turnaround after three rocky years, but conceded he has heard the rumors.

"We're probably dealing with a whole lot of rumor and conjecture," said Schneidler, noting that it's not an emergency meeting but was promised at a semiannual conference in April.

"I get called up and told you've just been bought out by so-and-so. Because we've gone through tough times the last couple years, like the industry, people lend more credence to those rumors, though they continue to be rumors," Schneidler said.

Fueling the speculation is a request by KPS to spend money from its reserves, a request denied by the state Insurance Commissioner's Office.

A representative from that office said he will attend Tuesday's meeting.

Aflatooni, who has been critical of the health insurer, said Tuesday's meeting is unusual because doctors have been kept in the dark about what will happen.

But Adams said the company has not intentionally kept secrets from its members. He said some doctors do not attend the company's semiannual meetings and may not be fully informed for that reason.

"There's no way to keep secrets anyway," he said.

KPS physician members were reluctant to discuss the upcoming meeting and what it might mean to the future of the company.

The Sun attempted to contact 17 KPS physicians about the upcoming special meeting, but none would comment.

Among those who did not return phone calls or who declined to comment on the meeting were four members of the KPS board of directors and Brian Wicks, president of the Kitsap County Medical Society.

Aflatooni, who has been at odds with KPS for years, said that he has been paid a fraction of his full reimbursement for the past month and that he knows of several other doctors in the same situation.

KPS Health Plans lost $15 million between 1996 and 1998. The company lowered its costs, enabling it to boost its reserves by a quarter million dollars during the first quarter of 1999, Schneidler said.

"We made the adjustments we needed to make," he said. "We have reversed the prior years' trend, and that continues to be the trend to date."

Schneidler denies that his organization is behind on its reimbursements to doctors and other providers.

"It's been suggested that we're not paying our providers. We continue to make payments for claims as we receive them," said Schneidler, suggesting that doctors may be seeing less money because fewer medical services are needed during the summer.

David Gitch, president of Harrison Hospital, said KPS has extended the time period between billing and payment, "but that's the same with all payers; they're not necessarily alone in that regard."

Schneidler dismissed forecasts of the company's demise.

"We're making appropriate plans to continue to be a successful organization," he said of the agenda for Tuesday's meeting.

Due to its earlier problems, KPS has been required to file monthly reports with Jim Odiorne of the state Insurance Commissioners Office. Odiorne has been invited to the meeting, and he plans to attend.

Odiorne said his office's primary responsibility is to the subscribers, but that it doesn't tell companies how to pay their bills.

"I never instructed KPS not to pay doctors," he said. "KPS did request the release of some funds that are restricted and require my approval. It's possible that the fact that I would not release them could have changed the manner in which they make payments."

Odiorne didn't grant the request, he said, because reserves must remain available to guarantee a company's solvency. He didn't say why KPS wanted the money.

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